The U.S. GDP Soars While Wall Street Falters Amidst Tech Giants’ Struggles
The third quarter is still in focus, and investors are still digesting the macroeconomic changes. On Thursday, October 26th, Wall Street Min indexes fell amid mixed sentiments hours after the release of the economy. GDP growth and economics
Beating market expectations, the U.S. gross domestic product surpasses the initial forecasts and the previous rate. In the third quarter, the GDP rate posted an increase of 4.9%, while marketers were expecting the rate to be somewhere around 4.3%.
The Nasdaq composite fell amid a mixed feeling among investors. The tech store has some very disturbing mixed earnings reports in the third quarter.
Meta, Tesla, and Google’s stocks were down after the release of the earnings reports. Meta initially rose 4% after strong results but then fell 4% due to uncertainty and volatility concerns.
Meta is holding off on a 2024 revenue outlook and increasing capex and costs related to infrastructure, payroll, and AR/VR investments.
Netflix and Microsoft were eagerly awaiting the release of Amazon’s third-quarter earnings report.
“We recognize that we have very ambitious investments on the horizon, including over a long-term horizon with our Reality Labs work and newer, equally ambitious investments we’ve added to the Gen AI road map more recently,” CFO Susan Li declared.
Despite the mixed reports, experts see that resilient consumer spending drove strong Q3 growth in the U.S. economy. This, in turn, has pushed corporation earnings higher than previous expectations.
The latest retail sales report exceeded expectations, reinforcing the growth outlook. Over the past two years, the retail sector has been quite a challenge to the economy due to the COVID restriction and the increasing costs. Yet the sector is showing signs of resilience. As for the subject of the FED’s aggressive monetary policy, there are some concerns about a slowdown ahead due to “higher-for-longer” interest rates. This in turn increases the potential risks, including cooling consumer spending, government shutdowns, and geopolitical issues. Between this and that, investors may be banking on a soft landing, but historical trends raise caution.
At the moment, the S&P 500 benchmark was down by 0.66% to 4.159 basis points. The tech-heavy composite Nasdaq declined by 1.16% to 12.675 basis points, while the Dow Jones industrial average edged lower by 0.27% to 32.953 basis points.
Meanwhile, in the oil sector, crude prices dipped due to rising U.S. oil stocks, indicating weaker demand, while uncertainty surrounding the Israel-Hamas conflict continues to affect trading. The U.S. West Texas Intermediate fell by 2.1% to $83.2 per barrel, while Brent crude oil was down by 1.71% to $88 per barrel. Furthermore, based on the Energy Information Administration, U.S. crude inventories climbed by 1.4 million barrels last week. However, despite that, there is a weakening in the oil supplies of the world’s largest consumer. Traders are closely monitoring the situation to assess its potential impact on crude supplies in the oil-rich Middle East region.